Published by EH.Net (October 2016)

Daniel Amsterdam, Roaring Metropolis: Businessmen’s Campaign for a Civic Welfare State. Philadelphia: University of Pennsylvania Press, 2016. v + 230 pp. $45 (hardcover), ISBN: 978-0-8122-4810-4.

Reviewed for EH.Net by Fred H. Smith, Department of Economics, Davidson College.

Most economists know that there was a fundamental change in the government’s role in the American economy during the first decades of the twentieth century.  With the passage of the Sixteenth Amendment, the First World War, and the Great Depression, there were abundant opportunities for the government to become ever more interwoven into the fabric of the economy.  However, I suspect that it is much less widely known or understood that that these changes were happening at federal and at local levels of government and that the magnitude of the changes at the local level was truly massive.  In Roaring Metropolis, Daniel Amsterdam presents a case study of three cities — Detroit, Philadelphia, and Atlanta — in order to show how these changes occurred and how the changes affected the lives of the cities’ residents.

In the introductory chapter Amsterdam makes it clear that his book fills a meaningful gap in the urban economic history literature.  He shows that local government expenditures exploded in cities across the United States between 1916 and 1928, and makes a persuasive case that the challenges faced by urban leaders in the 1910s and 1920s are remarkably similar to the challenges faced by urban leaders today. He also defines the term “civic welfare” to make it clear that it meant something very different to the business leaders of the early twentieth century than it might to the policy makers of today.  This is especially critical to understanding all that is to follow in Roaring Metropolis.  The civic welfare that Amsterdam writes about in the core chapters of the book describes social policy that was created to make a city more economically competitive with its neighbors; it was not policy designed to buffer a city’s residents from the harsh realities of a modern, industrial economy.

Chapter one introduces us to the earliest efforts of business leaders and politicians seeking to enact civic welfare policies.  While the civic leaders in Detroit, Philadelphia, and Atlanta faced some common obstacles in implementing civic welfare policy, each set of leaders also faced a distinct challenge that affected their city more than it did the other two.  In Detroit, business leaders of the 1910s were forced to work with a large, inefficient city council.  Philadelphia’s leaders faced off against a powerful Republican political machine that was reluctant (initially) to support civic welfare initiatives.  And, finally, Atlanta’s leaders had to navigate the interactions of a racially heterogeneous population and a city charter that required a supermajority in order to approve any referendum on bond financed spending.  Amsterdam shows that the combination of challenges each city faced before the end of World War I prevented any real progress from being made on the civic welfare programs that business leaders wanted.  In identifying the root causes of each city’s failures, he also sets the stage for the core chapters of the book (chapters two through four) — the case studies of each of the three cities.

The case studies focus on how the leaders of each city navigated the particular set of challenges that stood before them as they sought to implement the civic welfare initiatives they supported.  Given the difficulties Detroit has faced for the last three decades, it is ironic that it stands out as an especially well-functioning city in Roaring Metropolis.  Detroit’s major obstacle to enacting civic welfare before and during World War I was the structure of its city council.  The city charter called for a ward-based city council with thirty-six members.  With such a large city council, and with representatives loyal to their respective wards, it was difficult for business leaders to garner the support for their preferred projects.  So, civic leaders persuaded the electorate to allow the city’s charter to be rewritten.  Under the new charter the city council was comprised of nine members who were elected at large.  At-large representation, coupled with a smaller city council, made it easy for business leaders to ensure that their preferred candidates won seats and supported key civic welfare initiatives.

The business leaders in Philadelphia, with its well-established political machine, had a more difficult road to travel.  Philadelphia’s leaders had to work within the existing political structure, but, through carefully formed political alliances that allowed them to leverage existing political rivalries within the city’s Republican machine, they finally made progress on their civic welfare goals in the 1920s.  Indeed, of the three cities Amsterdam examines in Roaring Metropolis Philadelphia completed the most iconic civic welfare projects: The downtown parkway and the Philadelphia Museum of Art.

Atlanta’s business leaders also enjoyed successes in implementing their civic welfare policies, but they faced a set of challenges rather unlike Detroit or Philadelphia’s.  In 1920 Atlanta was a much smaller city than Detroit or Philadelphia, but it was also much more racially heterogeneous.  While Atlanta’s white population typically had no interest in seeing the city’s African-Americans vote, the city’s charter forced them to reconsider this position when it came to mustering support for civic welfare projects.  Atlanta’s city charter required the support of a two-thirds majority of registered voters in order to issue municipal bonds.  Thus, not only did the business leaders need a supermajority to pass a bond initiative, they needed to turn out at least two-thirds of the registered voters to even have a chance of passing the initiative.  African-American voters gained a surprising degree of power through this arrangement.  Simply registering to vote and staying home on election day exerted influence in Atlanta.  When looking to pass a new bond initiative, white civic leaders ignored the African-American community at their peril.

Ultimately, chapters two through four show us the myriad accomplishments of the cities’ business leaders.  In each city, civic welfare initiatives led to some combination of new schools, new sewers, additional water lines, and miles of new streets.  In Philadelphia, the city also spent money on public transportation infrastructure and constructed its first subway line.  Moreover, Detroit and Philadelphia built beautiful art museums, public libraries, and parks.  But, chapter five shows us what civic leaders did not accomplish.  Civic leaders did not implement civic welfare policies designed to alleviate the suffering that could be caused by living in a large city in a modern, industrial economy.  As Amsterdam points out, the “welfare capitalism” business leaders experimented with in the 1920s — limited fringe benefits, structured opportunities to socialize with co-workers outside of work, and recreational facilities at the firm — was designed to increase workers’ loyalty to their employers.  Business leaders still had no desire to create a social safety net of the sort that would be created during the Great Depression.

Roaring Metropolis ends with an epilogue that provides a brief overview of how each of these cities was to fare after the close of the decade, and, more specifically, how the cities fared during the Great Depression.  It also weaves the themes of the book together in a way that highlights the important contributions of this book and that ties the themes of the book to the present day.  In particular, Amsterdam does an exceptional job of making two points.

First, the civic welfare policies implemented in Detroit, Philadelphia, and Atlanta made these cities more livable, but, more importantly, these policies made the cities more attractive for businesses.  Yes, a better school system was a benefit to residents. But an educated workforce made a city a more attractive place to open or operate a firm, too.  Moreover, it is essential to remember that the civic welfare policies implemented in the 1920s did little to insulate city residents from the forces of a modern industrial economy.

Second, these gains were achieved almost exclusively through debt financing.  This is a theme that will be all too familiar to urban economists in the twenty-first century.  The business leaders and residents of a city might want better schools, additional acres of parks, and better infrastructure, but all too often voters are unwilling to pay the taxes needed to fund these initiatives.  In Roaring Metropolis, Amsterdam has chosen three cities that spent large sums of borrowed money on civic welfare because debt financing in the 1920s was not a problem.  After the brief economic downturn at the beginning of the decade, the economy performed well, and each of the three cities experienced rapid population growth.  But, as Amsterdam writes in the epilogue, the debt incurred in the 1920s became a crushing burden when the economy imploded in the 1930s.

Roaring Metropolis is a great success because it tells a fascinating story very effectively, it links historical events to present day challenges, and it discusses three cities that appear to be representative of the experiences of a wide range of American cities.  There is little to find fault with in the book, though economic historians may be frustrated by one of its quirks.  Amsterdam cites figures throughout the book, but he only occasionally puts them into terms that an economist might find useful.  For example, he typically quotes figures in levels (instead of discussing things in, say, per capita terms), and he rarely converts nominal values into real values.  These are minor quibbles, though.  Roaring Metropolis is a terrific read, and I highly recommend it to any urban economic historian who wants a better understanding of urban political economy in the 1910s and 1920s.

Fred Smith’s most recent paper, “What’s Manhattan Worth?” (co-authored with Jason Barr of Rutgers University), appeared on the program at the 2016 American Economic Association Annual Meeting.

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